Friday, May 5, 2017

Components of Interest Paid

Graph #1: Components of Interest Paid, as Percent of GDP
Households (blue), Federal (green), and US Business (red)

1 comment:

jim said...

Hi Art

Your graph today and graph#2 from your last post seem to support my conclusion that supply side economics was a fraud.

The theory was that by giving tax breaks to corporations and the wealthy the money would be used for productive capital investments. That might work when there is a shortage of supply of production and a surplus of demand for production but when there is no such imbalance between supply and demand then where is the money going to go? Graph#2 in your last post answered that question.

Your graph#1 today shows interest income (which I assume is equal to interest paid) is back to 1970 levels which seems to me to be a predictable outcome of too much invested in financial assets. What's interesting about Graph#1 is that it appears businesses were paying a lot of the interest while at the same time holding a lot of the financial assets.